Federal Communications Commission chairman Julius Genachowski revealed his “Third Way” to attempt to solve the Net neutrality issue that has been dogging Internet regulation negotiations for weeks. Genachowski’s plan generally calls for regulation of Web transmission by Internet service providers, but would renounce some requirements on carriers, such as rules that they would have to share lines with competitors.

In a statement Thursday, the FCC chairman said he supported a “restrained approach” to broadband Net neutrality regulations, “one carefully balanced to unleash investment and innovation while also protecting and empowering consumers.”

Genachowski’s approach is likely to be criticized by major carriers like AT&T, Comcast, and Verizon Communications, which want as little regulation as possible. However, firms like Google and Skype that rely on unfettered access to broadband are likely to support Genachowski.

The FCC chairman was clearly trying to pick his way through a complex minefield of regulations and arguments, but his “Third Way” is likely to be praised, challenged, and discussed from a variety of quarters. To start, however, Genachowski is certain to see his approach approved by his two Democratic colleagues on the FCC, commissioners Michael Copps and Mignon Clyburn, giving him a three-to-two endorsement over the two Republican commissioners.

While much of the issue is mired in arcane regulatory jargon, the results of the latest chapter in Net neutrality are likely to influence a wide sweep of Americans and measures ranging from delivery of broadband in rural areas to encouraging new investment and competition in broadband services.

Genachowski had been examining the issue since April, when a U.S. federal appeals court ruled that the FCC couldn’t sanction Comcast for blocking Bit Torrent from transmitting traffic over the Internet. Genachowski asked FCC general counsel Austin Schlick for legal guidance and Schlick suggested the “Third Way” approach.

Genachowski also appears to have received important backing from Senator John D. Rockefeller and Congressman Henry Waxman, both Democrats, before he announced his Third Way statement Thursday

Schlick reviewed proposals, including one to keep Title I authority to oversee broadband as it generally now is or to reclassify broadband as a telecommunications service. As currently defined, broadband is viewed as an information service and the FCC has little oversight over it. The carriers generally support keeping the Title I classification, while Google, Skype, and public interest groups wanted broadband to come under Title II.

“I have serious reservations about both of these approaches,” said Genachowski, adding that Schlick found the third way: “a legal anchor that gives the Commission only the modest authority it needs to foster a world-leading broadband infrastructure for all Americans while definitely avoiding the negative consequences of a full reclassification and broad application of Title II.”

Genachowski’s Third Way approach will be open for public comment, which is expected to be vigorous on both sides of the issue.

NEW YORK — The stock market had one of its most turbulent days in history as the Dow Jones industrials fell to a loss of almost 1,000 points in less than half an hour on fears that Greece’s debt problems could halt the global economic recovery.

The market’s plunge came less than 90 minutes before the end of trading. The Dow’s drop was its largest loss ever during the course of a trading day, but it recovered to a loss of 347 at the close. All the major indexes lost more than 3 percent.

There were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock’s price was enough to trigger “sell” orders across the market.

Still, the Dow was already down more than 200 points as traders watched protests in the streets of Athens on TV. Protestors raged against austerity measures passed by the Greek parliament. But traders were not comforted by the fact that Greece seemed to be working towards a resolution of its debt problems. Instead, they focused on the possibility that other European countries would also run into trouble, and that the damage to their economies could spread to the U.S.

The Dow fell 998.50 points in its largest point drop ever, eclipsing the 780.87 it lost during the course of trading on Oct. 15, 2008, during the height of the financial crisis. The Dow closed that day down 733.08, the biggest closing loss it has ever suffered.

The Dow has lost 631 points, or 5.7 percent, in three days amid worries about Greece. That is its largest three-day percentage drop since March 2009, when the stock market was nearing its bottom following the financial crisis.

“The market is now realizing that Greece is going to go through a depression over the next couple of years,” said Peter Boockvar, equity strategist at Miller Tabak. “Europe is a major trading partner of ours, and this threatens the entire global growth story.”

The stock market has had periodic bouts of anxiety about the European economies during the past few months. They have intensified over the past week even as Greece appeared to be moving closer to getting a bailout package from some of its neighbors.

Computer trading intensified the losses as programs designed to sell stocks at a specified level kicked in. Traders use those programs to try to limit their losses when the market is falling. And the selling only led to more selling as prices fell.

The selling was furious:

At 2:20 p.m. EDT, the Dow was at 10,460, a loss of 400 points.

It then tumbled 600 points in seven minutes to its low of the day of 9,869, a drop of 9.2 percent.

By 3:09 p.m., the Dow had regained 700 points. It then fluctuated sharply until the close.

“I think the machines just took over. There’s not a lot of human interaction,” said Charlie Smith, chief investment officer at Fort Pitt Capital Group. “We’ve known that automated trading can run away from you, and I think that’s what we saw happen today.”

On the floor of the New York Stock Exchange, stone-faced traders huddled around electronic boards and televisions, silently watching and waiting. Traders’ screens were flashing numbers non-stop, with losses shown in solid blocks of red numbers.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said the selling brought back memories of the 1987 crash.

“I’ve been watching the markets since 1982 and, believe me, I froze at the screen in ’87,” Ablin said. “But today … caused me to fall out of my chair at one point. It felt like we lost control.”

The impact on some stocks was enormous although brief. Stock in the consulting firm Accenture fell to 4 cents after closing at $42.17 on Wednesday. It closed at $41.09, down just over $1.

NYSE spokesman Raymond Pellecchia said the plunge wasn’t caused by a problem with the exchange’s trading systems. The Nasdaq Stock Market said it was reviewing its trades with other trading networks.

NYSE chief operating officer Larry Leibowitz said all the major stock exchanges were holding a conference call with the Securities and Exchange Commission to discuss what happened. It was not immediately known if there would be a statement issued after the call to explain the day’s events.

Nasdaq issued a statement two hours after the market closed saying it was canceling trades that were executed between 2:40 p.m. and 3 p.m. that it called clearly erroneous. It did not, however, mention a cause of the plunge.

Many professional investors and traders use computer program trading to buy and sell orders for large blocks of stocks. The programs use mathematical models that are designed to give a trader the best possible price on shares.

The programs are often set up in advance and allow computers to react instantly to moves in the market. When a stock index drops by a big amount, for example, computers can unleash a torrent of sell orders across the market. They move so fast that prices, and in turn indexes, can plunge at the fast pace seen Thursday.

The Dow recovered two-thirds of its loss Thursday. It closed down 347.80, or 3.2 percent, at 10,520. That was its biggest point loss since February 2009.

The Standard & Poor’s 500 index, the index most closely watched by market pros, fell 37.75, or 3.2 percent, to 1,128.15. The Nasdaq composite index lost 82.65, or 3.4 percent, and closed at 2,319.64.

At the market’s lows, all three indexes were showing losses for the year. The Dow now shows a gain of 0.9 percent for 2010, while the S&P is up 1.2 percent and the Nasdaq is up 2.2 percent.

At the close, losses were so widespread that just 173 stocks rose on the NYSE, compared to 3,008 that fell. The major indexes were all down more than 3 percent.

Meanwhile, interest rates on Treasurys soared as traders sought the safety of U.S. government debt. The yield on the benchmark 10-year note, which moves opposite its price, fell to 3.4 percent from late Wednesday’s 3.54 percent.

Obama Freezes Budget for Program Designed to Stop Terrorists from Getting U.S. VisasWednesday, May 05, 2010By Penny Starr, Senior Staff Writer

This Dec. 2009 photo released by the U.S. Marshal’s Service on Monday Dec. 28, 2009 shows Umar Farouk Abdulmutallab in Milan, Mich. Abdulmutallab, 23, is charged with trying to detonate an explosive device on a Dec. 25 flight from Amsterdam to Detroit. (AP Photo/U.S. Marshal’s Service)

(CNSNews.com) – Four months after the attempted Christmas Day bombing of Northwest Flight 253 over Detroit and nine years after the Sept. 11, 2001 terrorist attacks, only 14 of the 57 U.S. consulates identified as being at “high risk” for potentially providing visas to terrorists have been furnished with units of the Department of Homeland Security’s Visa Security Program (VSP).

President Barack Obama, meanwhile, is planning to freeze the program’s budget for fiscal 2011.
The VSP, established by the Homeland Security Act of 2002, puts Department of Homeland Security officials in the field at U.S. consulates to vet the backgrounds of people applying for U.S. visas. DHS uses a broader range of databases than the State Department to review the backgrounds of visa applicants. Also, many policymakers believe DHS officials tend to be more security-minded than State Department consular officers when reviewing visa applications.
While administration officials have said publicly that five additional VSP units should be in place at high risk consulates by the end of 2011, President Barack Obama’sfiscal Year 2011 budgetfor DHS–submitted almost two months after the Christmas Day bombing attempt—does not increase funding for the program from its fiscal 2010 level.

In fiscal 2010, Obama requested $32.2 million for the Visa Security Program and Congress approved $30.7 million, of which $7.3 million was earmarked for opening four new VSP units at high risk consulates. For fiscal 2011, Obama requested $30.7 million for the DHS, the same amount Congress approved for this year.

According to a March 8 Congressional Research Service (CRS)report, a lack of funding could hamper expansion of the Visa Security Program to the many high-risk consulates that still do not have a unit.

“The Obama administration is requesting that the VSP be funded at the same level in FY 2011 as Congress’ funding in FY 2010–$30.7 million,” says thereport. “The modest size of VSP with 67 full-time equivalent staff has led some to question how many VSP units DHS will be able to realistically staff.”

President Obama’s proposed freeze on VSP funding and the administration’s slow pace in putting new VSP units in high risk consulates is unacceptable to some congressional Republicans, who have introduced legislation to address these issues.

The Secure Visas Act (HR 4758),introduced in March by Rep. Lamar Smith (R-Tex.), would allocate $60 million to the program for fiscal 2010 and another $60 million for fiscal 2011 for placing VSP units in the 15 “highest risk” consulates beyond the 14 that already have units in place. That bill would approximately double the funding the Obama administration has allocated for the program in fiscal 2010 and fiscal 2011.

Representative Lamar Smith (R-Texas)

The Secure Visas Act also calls for conducting “an on-site review of all visa applications and supporting documentation before adjudication at all visa issuing posts in Algeria; Canada; Columbia; Egypt; Germany; Hong Kong; India; Indonesia; Iraq; Jerusalem; Israel; Jordan; Kuala Lumpur; Malaysia; Kuwait; Lebanon; Mexico; Morocco; Nigeria; Pakistan; the Philippines; Saudi Arabia; South Africa; Syria; Tel Aviv, Israel; Turkey; United Arab Emirates; the United Kingdom; Venezuela; and Yemen.”
“The visa security process is our first line of defense against terrorists and others who wish to do us harm,” Rep. Lamar Smith (R-Texas), the lead sponsor of the Secure Visas Act, told CNSNews.com. “But under President Obama, new Visa Security Units ground to a halt.”

“If the Obama administration will not exercise its authority to develop new VSUs (Visa Security Units) at the highest risk posts identified by its own Department of Homeland Security, Congress must step in,” said Smith.

“That’s why I introduced the Secure Visas Act–otherwise, continued delays amount to continued danger for the American people,” Smith said.

In a March 10 commentary in the Houston Chronicle, Smith and Secure Visas Act co-sponsor Sen. John Cornyn (R-Texas) noted that it took 12 months for the DHS to start the process for putting a VSP unit in Yemen, the country where Christmas Day bombing suspect, Umar Farouk Abdulmutallab, was radicalized.

“Department of Homeland Security Secretary Janet Napolitano waited 12 months before even sending a request to the State Department to open a unit in Yemen,” the senators wrote. “And only after increased pressure from Congress did the State Department and DHS see the value of approving more visa security units and authorize personnel to be placed in Yemen and Jerusalem.”

Sen. Joe Lieberman (I-Conn.), chairman of the Senate Homeland Security and Governmental Affairs Committee, said he believes the Department of Homeland Security and the State Department have not made making sure terrorist do not get visas a priority. (CNSNew.com/Penny Starr)

Congressional sources told CNSNews.com that Yemen and Jerusalem are believed to be among the four planned VSP units to be deployed in 2010.

The visa-issuing process and the progress of the VSP came under scrutiny after the failed Christmas Day attack Northwest Flight 253, when the Senate Homeland Security and Governmental Affairs Committee held hearings on the incident.

At the April 21 hearing, Sen. Joe Lieberman (I-Conn.), chairman of the committee, said the Obama administration was not making the expansion of VSP a priority.

“Here’s why I reached that conclusion,” Lieberman (I-Conn.) said. “DHS and the State Department have identified 57 high-risk consular posts around the world – that’s out of 200 posts that issue visas. But only 14 of those have received … Visa Security Program offices.”

John Morton, assistant secretary with U.S. Immigration and Customs Enforcement, which runs the VSP through its Office of International Affairs (OIA), testified at the hearing that 14 VSP units were in place in 12 countries, including one in London, which he said he personally helped establish.

John Morton, assistant secretary with U.S. Immigration and Customs Enforcement, said his agency is committed to expanding the number of consulates that have secure visa programs in place. To date, only 14 of the 57 consulates DHS and the State Department have labeled high-risk for terrorists seeking visas have secure visa programs. (CNSNews.com/Penny Starr)

At the hearing, Morton would not say which countries have a VSP unit in place, but the CRS report provides some details.

The report states: “The first VSP units were established in Saudi Arabia, as required by §428. In October 2005, VSP units were set up in: Manila, Philippines; Abu Dhabi and Dubai in the United Arab Emirates; and Islamabad, Pakistan. By the end of 2007, there were VSP units in: Cairo, Egypt; Caracas, Venezuela; Montreal, Canada; Hong Kong, China; and Casablanca, Morocco.”

“That year, the VSP proposed a five-year expansion plan, which proposed to concentrate expansion to the highest risk posts with the goal of covering 75% of the highest risk visa activity by 2013,” states the CRS report.

At the current rate of VSP placement–about five consulates every two years–it would take until 2021 for 75 percent of high-risk consulates to have the program in place.

At a Mar. 11 hearing of the House Homeland Security Subcommittee on Border, Maritime and Global Counterterrorism, Raymond Parmer, director of OIA, testified that the $7.3 million included in the fiscal 2010 budget for VSP expansion would pay for four more VSP units at high-risk consulates. He also said that the State Department’s chief of mission at each consulate has the final say about placement of the DHS’s Visa Security Program.

“Securing the homeland is now a global enterprise,” Lieberman said in a press release issued on the day of the April 21 hearing. “It begins well before people come into the United States.

“The Department of Homeland Security and the State Department need to work together to ensure that prospective travelers are fully vetted before boarding a plane bound for this country,” Lieberman said.

“Expanding the Visa Security Program is a key part of this global enterprise,” Lieberman said, “and we are prepared to be the bad cops if that’s what it takes to make sure that this happens.”

Posted By Robert Spencer On May 5, 2010 @ 12:39 am In FrontPage | 75 Comments

We know now that the car bomb in Times Square was an attempted Islamic jihad attack. But the mainstream media, following its usual pattern, is once again denying, minimizing, or obfuscating this fact.

Writing in The Nation on Monday, Robert Dreyfuss epitomized the mainstream media’s hope that the car bomber would turn out to be a right-wing extremist: “It may be that the Pakistan-based Taliban, the Tehrik-e Taliban Pakistan (TTP), has quietly established a Connecticut franchise while we weren’t looking. That’s possible. But it seems far more likely to me that the perpetrator of the bungled Times Square bomb plot was either a lone wolf or a member of some squirrely branch of the Tea Party, anti-government far right. Which actually exists in Connecticut, where, it seems, the car’s licence plates were stolen.”

In reality, according to Pakistani authorities, Faisal Shahzad, the would-be car bomber, attended a jihad training camp in that country. He spent five months in Pakistan recently, including some time in Peshawar, a center of Al-Qaeda and Taliban activity. A Pakistani Taliban group claimed responsibility for the attack — a claim that American authorities immediately dismissed, but which gained a new claim to serious consideration when Shahzad’s Pakistani connections were revealed.

Shahzad parked his explosives-laden SUV outside the offices of Viacom, the parent company of Comedy Central, which presents South Park, the cartoon whose creators were just threatened with death by Islamic supremacists in New York for daring to lampoon Muhammad. The Muslim group that issued the threat, Revolution Muslim, was proselytizing in Times Square just hours before Shahzad’s car bomb was discovered.

Yet for all this, virtually no media reports are saying anything about Shahzad being a Muslim. Such a reference, however, would hardly be gratuitous: Islamic jihad theology and the death penalty enshrined in Islamic law for anyone who insults Allah or Muhammad are the most likely keys to Shahzad’s motivation. But the politically correct, multiculturalist imperative demands that Islam and Muslims, being (at least in this addled view) non-white and non-Western, must always be portrayed as victims, no matter how imaginative the lengths to which analysts must go in order to find something, anything, to blame for the carnage other than Islam’s doctrines of hatred of and violence against unbelievers.

Ezra Klein in the Washington Post led the way in the imaginative department. Observing that Shahzad defaulted on the mortgage on his home in Connecticut and that the property is now in foreclosure, Klein discovered a hitherto-unnoticed motivation for violent jihad: “foreclosures generate an enormous amount of misery and anxiety and depression that can tip people into all sorts of dangerous behaviors that don’t make headlines but do ruin lives. And for all that we’ve done to save the financial sector, we’ve not done nearly enough to help struggling homeowners.” Help struggling homeowners, or they’ll try to set off car bombs in Times Square!

MSNBC’s Contessa Brewer, meanwhile, may not have had to face the heartbreak of foreclosure, but she had her own reason to feel “an enormous amount of misery and anxiety and depression”: what got Brewer down was that Shahzad turned out to be a Muslim. “There was a part of me,” lamented Brewer once the perpetrator was identified, “that was hoping this was not going to be anybody with ties to any kind of Islamic country.”

Brewer explained that she hoped that Shahzad’s action would not give rise to a resurgence of what she called “outdated bigotry” – voicing the common mainstream media preoccupation with a “backlash” against innocent Muslims. This preoccupation manifests itself in a flood of articles about Muslims fears of this “backlash” every time there is an attempted or successful jihad terror attack in America or Europe; the only thing that never appears is the backlash itself, which remains more a figment of the Leftist media’s imagination than an actual threat against innocent Muslims.

Nonetheless, New York Mayor Michael Bloomberg was likewise preoccupied with this phantom threat of a backlash, warning New Yorkers several times that any action against Muslims or Pakistanis. Bloomberg ought to be ashamed of himself. He should have been making statements about protecting Americans of all creeds, and calling the Muslim community in America to account for its tolerance of jihadists. There has never been a backlash against innocent Muslims in the U.S. It is a fiction that we only hear about when a Muslim plots mass murder of Americans. And then we hear about it endlessly, as if Muslims were the victims rather than the perpetrators.

Faisal Shahzad and his car bomb is yet another indication of the tenacity and persistence of the jihad against the United States – and of the continuing and even hardening resistance of American officials to the elementary step of even admitting that that jihad is being waged.

It’s Because They Want To Kill Us, Stupid

The night the NYC car bomb attempt went down, I was so grateful that, once again, the diligence of the public and the swift action of the NYC Police thwarted yet another potential attack. Shortly thereafter, while still incredibly grateful obviously, I became angry. I’ve had it. Firstly, because the current strategy of homeland security seems to be “Hey, guys, we’ve totally unclenched our fists. We can haz cookie now?” Secondly, because the left and their media lackeys are not only dangerously naive, but also purposefully misleading.

They are so deeply invested in both political correctness and in their violent, racist “tea baggers” meme, it clouds all else. Even common sense and the security of our country. It was swiftly apparent that they were *wishing* that the failed bomber was a tea partier, so that they could further their lame narrative and continue to try to excuse Obama and his administration for their failures and utter incompetence. Gee, Obama, how is that “unclenching of fists” deal working out for you?

That night, Attorney General Holder said “It’s important that American people remain vigilant.” Sadly, it’s quite clear that the administration and many on the left refuse to do the same; unless it’s remaining vigilant in their pursuit of demagoguing Republicans. It’s gotten to the point where I was honestly waiting for the release of a statement from Obama, consisting of a sternly worded apology and claims that he inherited the bomber, Faisal Shahzad, from Bush.

Michael Bloomberg started the insane blame the Republicans at all costs narrative off with a bang. When asked by the elfin Katie Couric for a guess as to who the bomber could be, Bloomberg offered this:

“If I had to guess 25 cents, this would be exactly that. Homegrown, or maybe a mentally deranged person, or somebody with a political agenda that doesn’t like the health care bill or something. It could be anything,” he said.

Oh, yes, Bloomberg. Those violent, hateful health care bill deniers! Man, someone has to stop those dangerously radical thugs! What’s next? The singing of the National Anthem?! Maybe finding photographs of Obama and fiendishly drawing mustaches and devil horns on them in a frenzied rage of rightwing extremism? I’m only surprised that Bloomberg didn’t also suggest that it was probably an evil smoker or salt eater.

When the information was released that the attempted bomber’s name was Faisal Shahzad, the delusional spin intensified. All across (alleged) newsrooms, thoughts of ” Wait; this whole Faisal Shahzad thing must be inaccurate. That doesn’t sound like a health care-hating, “tea bag-y” name” abounded. CNN quickly hypothesized that perhaps Shahzad was a victim of post home foreclosure traumatic syndrome , as a way to mitigate their sorrow over him not being a tea partier. Most tried to do it stealthily and keep the full extent of their sorrow to themselves, but not Contessa Brewer!

I mean the thing is is that and I get frustrated and there was part of me that was hoping this was not going to be anybody with ties to any kind of Islamic country because there are a lot of people who want to use this terrorist intent to justify writing off people who believe in a certain way or come from certain countries or whose skin color is a certain way. I mean they use it as justification for really outdated bigotry. And so there was part of me was really hoping this would not be the case that here would be somebody who is not the defined.

No, really. It’s on video. I think that Contessa Brewer should be more frustrated and oh-so-sad by the fact that she’s, you know, Contessa Brewer. I also think she should just stop talking. Now. I’m certain the two people who watch her network can somehow manage to muddle through without her “insight.” This was all topped off by the CBS/AP headline today:

Hey, media, you know what might help uncover the shrouded mystery? How about you try mentioning the word “Muslim” or “Islam”? Even just once. Note, it doesn’t appear anywhere in that entire article. And the omission of either word has been glaring in all accounts. Well, except for one. When that bastion of stupidity, Mayor Bloomberg, spoke out, not against the perpetrator of the crime, but pre-emptively against American citizens; the potential victims of a terrorist attack. (Via allahpundit)

Mayor Michael Bloomberg says New York City “will not tolerate any bias” following the arrest of a U.S. citizen from Pakistan in the Times Square car bombing attempt.

Bloomberg said Tuesday that also applies to potential backlash against Muslim New Yorkers.

Sigh. Listen, everyone has the right to be stupid, but you, Mayor Bloomberg, totally abuse the privilege. It is rather telling that the only time the word Muslim or Islam is even acknowledged is when the rest of us are being accused of being racist half-wits.

Andrew Breitbart summed it up, in a nutshell, in his response to Contessa Brewer who, while personally astoundingly mockable, really just epitomizes leftist thought as a whole. He asked if she was aware that “tea baggers” would save her life, while Islamists want to take it.

That’s the crux of their willful ignorance right there; sometimes, being an Islamic terrorist IS the motive itself. As Leon de Winter wrote at Pajamas Media, “Faisal Shahzad is a Muslim terrorist motivated to kill by his religion, not by the loss of his house to the bank.”

Instead of busily demonizing American citizens, apologizing to those who wish to kill us, and frantically avoiding perceived “profiling” out of the insane fear of looking non-politically correct, they should learn that lesson.

I’ve said it before and I’ll say it again: Political correctness is no longer just annoying. It’s deadly.

Announcing a 6.7 billion dollar loss in the first quarter, Freddie Mac said it would need the new funding by June 30 this year.

The Washington-area company has already received more than 50 billion dollars in taxpayers cash to cover losses from toxic assets.

It warned that further demands would be on the way: “Freddie Mac expects to request additional draws,” the firm said in a statement.

“The size and timing of such draws will be determined by a variety of factors that could adversely affect the company’s net worth.”

In 2008, the government pledged to ensure that Freddie Mac, and its larger sister organization Fannie Mae, kept a “positive net worth.”

The deal was designed to prop up the vital US housing market from collapsing totally and pushing the economy over the precipice.

But in a sign that the US housing sector is still in difficulty, Freddie said the percentage of its loans not paid on time or in full rose to 4.13 percent in the first three months of the year.

In the final three months of last year the rate stood at 3.98 percent.

The future of Fannie and Freddie has become the latest bone of contention between Democrats who argue they must remain government-backed to aid low-income housing and Republicans who advocate their privatization.

In March, Treasury Secretary Timothy Geithner swatted aside pressure for a swift reform of the mortgage giants as data pointed to a still struggling real estate market.

Geithner told Congress any restructuring of Fannie Mae and Freddie Mac, which received a 100-billion-dollar-plus government bailout at the height of the housing crisis, “must be done as part of a reform of the wider housing finance system.”

Geithner argued reforms would “take several months” to develop and should only be “enacted and executed at a time of greater market stability.”

The controversies over the Arizona immigration plan and the Obama Administration’s response to the oil spill in the Gulf may not seem related, but they have a key common characteristic: both originate in the failure of Washington.

In both cases, President Obama faces a real danger of a political backlash from which he will be unable to recover.

More importantly, they are both part of a rapidly evolving pattern of big government failure that will be a fundamental challenge to our country over the next quarter century.

Federal Failure on Immigration and Border Control

Before anyone criticizes the citizens of Arizona who are worried about their lives and their safety, they should focus on the abject failure of the federal government to control the border and enforce our immigration laws.

Consider the facts on the ground:

• 15% of Arizona’s state prisoners are illegal immigrants;
• The number of kidnappings in Phoenix, Ariz., has exploded as the Mexican drug cartels have brought their violence North of the border;
• Two Phoenix police officers have been killed in recent years by illegal immigrants;
• A cattle rancher near the Mexican border was recently killed by a drug smuggler;
• Just last week a deputy sheriff was wounded in a gun battle with men suspected of being drug smugglers from Mexico.

Nationally, 51% of Americans who have heard of the law support it, with 39% opposed.

This is despite the frequent distortions and flat-out lies about the facts of the bill being reiterated in the mainstream media (Byron York and Andy McCarthy have been especially good at setting the record straight.)

The Obama Administration will alienate the vast majority of Americans if it insists on attacking the Arizona law instead of solving the problems of an uncontrolled border and a failed immigration system.

The right answer for Washington is to meet its responsibilities: 1) Control the border; 2) Pass common sense immigration reform, including a guest worker program and intense enforcement aimed at illegal employers (without whom there would be no magnet to draw in people outside the law); and 3) Ensure that all Americans can live in safety in a law abiding country.

At that point the Arizona law would become moot and unneeded. Let’s solve the problem, not the symptom.

Federal Failure in Louisiana…Round 2

President Obama faces another challenge in the controversy surrounding the federal government’s response to the oil spill in the Gulf.

Of course, this controversy has echoes of the Hurricane Katrina disaster, which was enabled by government, both in the failure to maintain the levee and pumping system and in taking too long to respond.

The Bush Administration’s inability to recognize these failures and fix them was a major factor in its loss of public support (which never recovered to pre-Katrina levels).

Today, it is not yet clear what degree of responsibility the federal government has for the oil spill disaster. But every day we get new pieces of information that suggest this spill could have been contained if the federal government had acted swiftly and competently.

We know that Deputy Interior Secretary David Hayes said the Deepwater Horizon was inspected less than two weeks before the explosion. However, without knowing the cause of the accident, it is impossible to know if something was missed that would have prevented the explosion or failure of the “blowout preventer” that should have shut off the oil flow.

We also know that it took over eight days for federal government to deem the spill a disaster of “national significance” and fully devote federal resources to the problem. In fact, on April 23, the Coast Guard was still claiming there was no leak.

Furthermore, Ron Gouget, who formerly managed the oil spill recovery department of the National Oceanic and Atmospheric Administration, has made the point that there has been an oil spill clean-up plan on the books since 1994, but federal officials took a full week before attempting to execute that plan. This is partly because, despite this standing plan, the federal government did not have a single fire boom on hand to execute it.

Even the liberal New York Timeshas called the timetable of the government’s response “damning”.

The Obama Administration now faces dual challenges in the Gulf and in Arizona. If it misunderstands and fails to respond effectively to these challenges, it could suffer an equally serious loss of public support.

The Future of Offshore Development

This analysis does not in any way exclude British Petroleum (BP) from responsibility.

Even though the rig was owned and operated by a private contractor and the cause of the explosion and equipment failure is not yet known, BP has rightly pledged to pay for the Gulf spill’s cleanup.

However, despite this disaster, it is clear that offshore development must continue.

In fact, it must expand.

The spill, while tragic, does not change any of the underlying facts about America’s current or future energy and national security needs:

• Offshore drilling is still a viable source of new jobs for a struggling economy. One study shows that expanded offshore drilling could create as much as a million new jobs a year over the next three decades;
• Offshore drilling is still a key source of potential revenue for states struggling to balance their budgets. In 2009, offshore drilling generated more than $2.7 million for Gulf states, as well as nearly $1 million for the Land and Water Conservation Fund;
• Offshore drilling is still an essential component of a strategy to supplant the 11 million barrels of oil per day ($935 million) we import from other countries, including dangerous dictatorships that fund terrorism.

This is why the cynical attempts from the left to use this disaster as an excuse to stop all development in the Gulf and elsewhere are so misguided.

There are over 3,500 oil platforms in the gulf producing 1.2 million barrels a day. They support tens of thousands of jobs, with about 35,000 workers engaged in Gulf offshore activities at any one time. At the current price of $85 a barrel, shutting down all offshore drilling in the Gulf would force us to send an additional $102 million every day to foreign countries. That number will only increase as the summer approaches.

Those analysts who note this was the first American offshore well disaster since 1969 indirectly make the case for continued development. A once in 41-year event is something to be prepared for, not something that should be allowed to increase our dependence on foreign dictatorships for energy.

Similarly, those who point to the Exxon Valdez spill often fail to note that shipping oil is more likely to lead to a spill than drilling.

Investigate. Fix. Move Forward.

Ultimately, this is a question about the character of America.

Will our response to this disaster be to stop, litigate, and lose our nerve?

Or will it be the historic American response to challenges such as these: investigate, fix, and move forward with a safer system than before?

When two airliners collided over the Grand Canyon in 1956 with disastrous fatalities, followed by two similar accidents in 1958, the answer was not shutting down the commercial airline industry. The answer was developing the air traffic control system which has made commercial air travel much, much safer than driving a car.

After the 1979 incident at Three Mile Island nuclear plant, an independent commission was appointed to investigate exhaustively the cause of that event. The response was not to abandon nuclear power, which produces 20% of electricity in the United States.
After the levees failed in New Orleans during Hurricane Katrina in 2005, an independent investigation determined that new levees should have specific engineering upgrades, more erosion protection, and that there should be better communication between the federal and local governments. The response was not to force residents to abandon New Orleans forever.

Similarly, we should take the BP disaster very seriously. Yesterday, American Solutions called for an independent commission to investigate the spill, paralleling the commissions that investigated Three Mile Island and the Challenger explosion.

Those who favor offshore development must respond with greater intensity than those who oppose development and have the luxury of unthinking opposition with no thought to the economic and national security consequences.

We should support a vigorous investigation that determines what investments could have avoided it and what the most effective cleanup system would have been. And then we should support a lean, effective government to implement those findings.

Effective Government, not Big Government

The Founding Fathers were for limited but effective government.

Peter Drucker, the great information age management expert, warned again and again that big government was inevitably bureaucratic and ineffective.

Alvin and Heidi Toffler have repeatedly warned that government is getting slower while the modern world is getting faster.

I have written and spoken before about how government has become the fourth recent bubble (after IT, housing, and the derivatives market — it is overleveraged, underperforming, and fundamentally dishonest about its underlying stability. The collapse of the government bubble will be even more disruptive than the previous three.

More and more, we are seeing that ever growing government is no longer just a threat to our wallet; it is a threat to our personal safety. Both in Arizona and the Gulf, we are being reminded that a massive federal government has been massively ineffective.

A limited federal government can better focus attention and resources on its core responsibilities, which absolutely include controlling the border and large scale disaster recovery.

It is time to reform Washington by returning power and responsibility back to the state and local governments.